Intel manufactures microprocessors in a highly automated facility with high fixed costs. The market for microprocessors is competitive so Intels strategy is to differentiate their products by providing consumers with unique features. Intel uses speed, innovation, and manufacturing techniques as bases of uniqueness.

In 2019, Intel planned to achieve their strategy by improving yields and reducing defects in its manufacturing operations. Intels balanced scorecard for the just completed fiscal year 2019 as well as its 2018 performance follows:

Intel has also given you some other financial information.

1. Calculate Intels sales margin, capital turnover and ROI for 2018 and 2019. Combined with the information in Intels Balanced Scorecard was Intel successful in implementing its strategy in 2019? Explain your answer.

2. Is Intels balanced scorecard useful in helping the company understand why it did not reach its target market share in 2019? If it is, explain why. If it is not, explain why not. What other measures might Intel use to better understand its performance in relation to its strategy.

3. Write a memo to Intels management about the cause-and-effect linkages between the different measures in their Balanced Scorecard. Include in your memo an analysis of the problems between the Internal Business Perspective and the Customer Perspective. Do you think employee satisfaction and the development of new products are critical for Intel to implement its strategy? Why or why not? Explain.

Objectives Measures Actual 2018 Performance Target 2019 Performance Actual 2019 Performance Financial Perspective Increase shareholder value $2,000,000 $3,000,000 $2,000,000 Operating income changes from productivity improvements Operating income changes from growth $2,000,000 $3,000,000 $2,000,000 74.5% 75.0% 74.5% Market share in microprocessors 99.1% 99.3% 99.5% Customer Perspective Increase market share Internal Business Perspective Improve manufacturing quality Reduce delivery time to customers Learning and Growth Perspective Develop process skills First Pass Yield (measure of good units with no rework) Order delivery time 27 days 24 days 22 days 89% 90% 92% Percentage of employees trained in process quality management Percentage of manufacturing processes with real time feedback Enhance information system capabilities 84% 85% 87% O Intel Sales Revenue Assets Operating Income Actual 2018 Performance $23,900,000 $20,000,000 $5,000,000 Target 2019 Performance $27,000,000 $21,000,000 $5,600,000 Actual 2019 Performance 24,900,000 $21,000,000 $5,100,000